A Chapter 7 proceeding starts with the debtor filing a petition with the bankruptcy court. In addition to the petition, the debtor must also file with the court several schedules of assets and liabilities, details of current income and expenditures, a statement of financial affairs, and details of executory contracts and unexpired leases. The schedules and statements include the following information:
Details of of all creditors and the amount and nature of their claims;
The source, amount, and frequency of the debtor’s income;
A list of all of the debtor’s property; and
Details of of the debtor’s monthly living expenses (food, clothing, shelter, utilities, taxes, transportation, medicine, etc.).
Businesses intending to file Chapter 7 should seek the assistance of a seasoned Harris County, GA chapter 7 business bankruptcy attorney as the chapter 7 business bankruptcy process is complex.
In Chapter 7, the company ceases all activities and exits the business completely. A trustee is appointed to liquidate the company’s assets and the amount is used to pay off the debt, which can include debts to creditors and investors.
The investors who take the least risk are paid first. Secured creditors take less risk because the credit that they extend is generally backed by collateral, such as a mortgage or other assets of the company. They know they will get paid first if the company files for bankruptcy protection.
Bondholders have greater potential of recovering their investments than stockholders, because bonds represent the debt of the company and the company has accepted to pay bondholders interest and to return their principal. Stockholders own the company, and take more risk. They could make more money if the company does well, but they could lose money if the company does poorly. The owners are the last to be repaid if the business fails. Bankruptcy regulations determine the order of payment.
———————Athens Georgia bankruptcy lawyer | Bankruptcy attorneys in Athens GA and Athens-Clarke County – Filing for Chapter 7 Bankruptcy and Chapter 13 Bankruptcy
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